Gold Demand Falls 1% in Q1 2015. Gold Trend is Down. China Demand Weaker, Only Hope is India

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Gold Market Shifting to AsiaGold demand is weaker in Q1 2015. The main reason is the shrinking demand from China – the largest consumer of the precious metal. In a generally quiet quarter, global demand dipped 1% to 1,079t. However, the gold market’s complex eco-system was well balanced in Q1 2015. Conditions differed from market to market but at an aggregate level, these differences broadly cancelled out. Growth in India and the US could not prevent a modest downtick in jewellery demand; light inflows into ETFs, the first since 2012, led to growth in investment. Global demand for gold fell by 1% in the first three months of this year after declines of some of the key markets identified in the report World Gold Council. See the report below:

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Jewellery demand dipped by 3% in Q1 2015 to a shade above 600t

Jewellery demand for the first quarter totalled 601t, a level it has adhered to reasonably firmly since Q3 2013. Demand began the year by responding, in varying degrees according to specific local market conditions, to economic growth and price movements.

Total supply was virtually unchanged year-on-year at 1,089t; lower recycling offset growth in mine supply.

Mine production increased by 2% year-on-year to 729t in the first three months of 2015, with growth coming from a number of markets. This was offset by recycled gold supply, which fell by 3% to 355t in Q1. Overall, this left total supply virtually unchanged at 1,089t. Demand for the yellow metal reached 1079 tons in the first quarter compared to 1090 tons in the first three months of 2014.

“So basically stable global picture smooth regional and sectoral differences,” said Alastair Hewitt, head of the study.

Purchases of jewelry – a key segment of demand, they decreased by 3% in the first quarter from a year earlier, to 601 tons. Demand for bullion investment coins also remained under pressure due to the good performance of stock markets in India and China, which shifted their capital from commodities. In Europe, however, was a jump in demand for bars and coins by 16% to 61 tons amid the economic uncertainty in the region.

Gold Demand Stats and Trends (1)

 

China and India as Important for Gold as Always

Nothing has changed. China and India – the two largest markets of the precious metal, which are responsible for more than half of total consumption, reported various presentations and are still the most important countries for the metal. Demand for gold in the Celestial Empire has fallen by 7% from a year earlier to 273 tonnes due to the economic slowdown and restrained purchases during the Lunar New Year. The decline in gold purchases was led by a weak demand for jewelry, which slid 10% to 213 tons.

In India, the removal of government restrictions on imports of gold and overall sense of “economic optimism” stimulate purchases, said Hewitt. Aggregate demand grew by 15% in the first quarter to 192 tons and purchases of jewelry increased by 22% to 151 tons.

Looking ahead to the second quarter, the Indian festival Akshaya three in April probably will support demand, and China will resume its purchases due to government incentives, said the World Gold Council. For the full year, the organization predicts that global demand for the metal will total between 4200-4300 tons compared to 3,924 tons last year.

During late Asian session on Thursday, gold traded at 1215 dollars an ounce.

Gold Price

Investment demand from ETFs such as (GDX) is up 4% as ETF inflows offset a decline in bar and coin demand

Total investment demand grew moderately to 279t in Q1, slightly above Q1 demand in both 2013 and 2014 (at 260t and 268t respectively). The first quarterly inflow into ETFs since Q4 2012 outweighed a contraction in bar and coin investment.

Central bank net Purchases continue but Technology Demand Down

Central banks and other official institutions continued their buying momentum in Q1 with net purchases totalling 119 tonnes. This was virtually unchanged compared to the same period in 2014. Diversification continues to be the primary driver for the accumulation of gold reserves.

Demand for gold in technological uses slipped by 2% to 80 tonnes, the lowest quarterly level in our records (back to 2000). Substitution and thrifting in this sector continue to weigh on gold demand, as manufacturers seek out cheaper alternatives.

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